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Senate committee advances bill to extend aircraft maintenance tax exemption for MROs
Summary
The committee gave SB175 a favorable report to allow maintenance, repair and overhaul facilities that retrofit leased aircraft to qualify for a state tax exemption, with a five-year sunset and a unanimous committee vote.
Senate Bill 175, introduced by Senator Kitchens, received a favorable committee report after discussion about a tax exemption for maintenance, repair and overhaul (MRO) facilities that retrofit leased aircraft.
Supporters said the bill would level the playing field for Alabama MROs that currently do not qualify for the state's aircraft tax exemption because the law covers only entities that fully manufacture and deliver an aircraft in the state. Senator Kitchens told the committee that because of the current definition, airlines and leasing companies often fly aircraft to other states such as Mississippi to take advantage of more favorable tax treatment, moving work out of Alabama.
The bill includes a five-year sunset provision so lawmakers can revisit the exemption once more fiscal data is available. Committee members asked clarifying questions about the scope of the exemption and the local industry impact in Marshall County and Birmingham. No fiscal note detail was presented during the hearing beyond the sponsor's statement that the exemption would largely capture activity that is currently occurring out of state rather than in Alabama.
The committee adopted the bill by roll call, 16 ayes, 0 nays; the clerk recorded the measure as given a favorable report.
The committee did not identify specific statutory citations during the discussion; lawmakers framed the change as closing a loophole in existing tax law so that MRO work done in Alabama would qualify like a full manufacture/delivery transaction.
